News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bullish
Oil - US Crude
Bullish
Wall Street
Mixed
Gold
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bullish
USD/JPY
Bearish
More View more
Real Time News
  • #Crudeoil prices could reverse lower as the #OPEC Monthly Oil Market Report (MOMR) forecasts fading global demand and oversupply concerns. Get your #commodities update from @DanielGMoss here: https://t.co/G02ajeLPqZ https://t.co/THuauT4XQ9
  • The outlook for the $EURUSD pair has worsened after its failure to move back to the high just above 1.20 touched on September 1 despite the #ECB’s decision earlier this month not to talk down the Euro. Get your #currencies update from @MartinSEssex here: https://t.co/kDCHxHgGlU https://t.co/Li4jHqaNdC
  • #USDollar Outlook Bearish on Mnuchin & Powell Testimonies, Key US Data ⬇️ https://www.dailyfx.com/forex/fundamental/forecast/weekly/usd/2020/09/20/US-Dollar-Outlook-Bearish-on-Mnuchin-Powell-Testimonies-Key-US-Data.html
  • The London trading session accounts for around 35% of total average forex turnover*, the largest amount relative to its peers. The London forex session overlaps with the New York session. Learn about trading the London forex session here: https://t.co/UTWxbnNz7M https://t.co/fuWSUDE1pT
  • The Federal Reserve System (the Fed) was founded in 1913 by the United States Congress. The Fed’s actions and policies have a major impact on currency value, affecting many trades involving the US Dollar. Learn more about the Fed here: https://t.co/ADSC4sIHrP https://t.co/eRTdlhAOFN
  • The Japanese #Yen may continue to exhibit a bullish behavior as the Bank of Japan (BoJ) appears to be in no rush to alter the path for monetary policy. Get your #currencies update from @DavidJSong here: https://t.co/HFjc6KGzRw
  • The New Zealand Dollar appears poised to extend its climb against its haven-associated counterparts as long-term trend break hints at cyclical upturn. Get your $NZDUSD market update from @DanielGMoss here: https://t.co/CPxP1Q8B6d https://t.co/n2wESiqnpJ
  • The US Dollar may rise against ASEAN currencies like the Singapore Dollar if local retail sales and sentiment data disappoints. USD/IDR may fall on the Bank of Indonesia. Get your market update from @ddubrovskyFX here:https://t.co/HpH8pXFdLl https://t.co/laHmaZXpJe
  • The US Dollar may rise against the Singapore Dollar and Philippine Peso. USD/MYR’s downtrend holds, but a bullish pattern brews. USD/IDR seems stuck between key technical levels.Get youe #ASEAN currencies market update from @ddubrovskyFX here:https://t.co/TF6DRVp6kX https://t.co/WEtxkdSwxD
  • There are three major forex trading sessions which comprise the 24-hour market: the London session, the US session and the Asian session. Learn about the characteristics of each session here: https://t.co/UVvf51HiVP https://t.co/4wlRjBTCzK
Australian Dollar May Rise on RBA, Economic Outlook, Strong Risk Appetite

Australian Dollar May Rise on RBA, Economic Outlook, Strong Risk Appetite

2020-08-28 19:00:00
Dimitri Zabelin, Analyst
Share:

AUSTRALIAN DOLLAR FUNDAMENTAL OUTLOOK: BULLISH

  • Australian Dollar may rise on RBA rate decision and economic stabilization
  • Resilient risk appetite, support from central banks may amplify AUD’s gains
  • Having said that, escalating tension with China could curb the Aussie’s rise

RBA Rate Decision: What to Expect

At the last RBA rate decision on August 4, officials chose to hold the overnight cash rate at 0.25 percent and maintained that same yield target for 3-year sovereigns. About two weeks later, officials said they are prepared to adjust the stimulus package if the circumstances warranted it. Policymakers added that additional fiscal and monetary support may be necessary for some time.

Having said that, RBA Governor Phillipe Lowe stated that “The Australian economy is going through a very difficult period and is experiencing the biggest contraction since the 1930’s. As difficult as this is, the downturn is not as severe as earlier expected and a recovery is now underway in most of Australia”. To see the full text, visit the RBA site here.

How to Use IG Client Sentiment in Your Trading
How to Use IG Client Sentiment in Your Trading
Recommended by Dimitri Zabelin
Improve your trading with IG Client Sentiment Data
Get My Guide

Consequently, if these unexpected signs – albeit uneven and “bumpy” – of economic improvement continue to manifest, the urgency to introduce additional stimulus may wane. This may then push AUD higher if investors focus on swift recovery expectations. Having said that, heightened geopolitical tensions between Australia and China could cap the currency’s gains if rhetoric mutates from words to written policy.

Economic Stabilization

As the statement by RBA Governor Phillipe Lowe states: “The outlook remains highly uncertain. The recovery is expected to be only gradual and its shape is dependent on containment of the virus”. For Australia, this is a somewhat gloomy message as the country re-imposes aggressive lockdown measures to contain a flare-up of Covid-19.

Forex for Beginners
Forex for Beginners
Recommended by Dimitri Zabelin
Forex for Beginners
Get My Guide

Having said that, domestic viral uncertainty may be offset may renewed risk appetite and signs of global stabilization. The Citi Group Economic Surprised Index shows that economic data on a global scale has been outperforming relative to economists’ expectations at the highest rate ever recorded. This suggests that analysts initially perhaps overestimated the severity of the recession.

Citi group economic surprise index global

For a cycle-sensitive currency that is tied to an outward-facing economy, early signs of improvement are re-assuring for countries that are anchored to the global growth outlook. Consequently, if economic data this week – particularly the cascade of PMI reports coming out of developed and emerging markets – reinforces this notion of improvement, the Australian Dollar may rise.

Strong Risk Appetite Boosting Demand for High-Yielding Assets

As a positive knock-on effect, economic stabilization – along with aggressive support by central banks – buttresses risk appetite adds another gust of wind to AUD’s sails. Overlaying Deutsche Bank’s Australian Dollar currency index with an AUD inflation swap zero coupon (10Y) shows price growth expectations rising in tandem.

AUD Dollar with inflation

What this underscores is an underlying expectations that future economic activity will rise, and with it, price growth. As noted earlier, a change of tone in the RBA’s sense of urgency may magnify AUD’s gains, particularly if economic data domestically and in China – Australia’s largest trading partner – shows a brighter outlook.

--- Written by Dimitri Zabelin, Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitri on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES